Bloomberg Tech: Kontext's $10M Seed Round and AI's Impact on Advertising

Brent Murri, a partner at M13, led a $10 million seed round in Kontext, a generative AI startup. Murri expects AI to bring significant developments to the advertising industry, marking a new era for the digital ad market.

Brent Murri, a partner at M13, recently led a $10 million seed round in Kontext, a generative AI startup. Murri expects AI to bring significant developments to the advertising industry, marking a new era for the digital ad market.

Kontext, co-founded by Andrej Kiska (formerly of Credo Ventures), is working with early customers like Amazon, Netease, and performance marketing agencies like Liquid Advertising to redefine advertising in generative AI applications with context-rich ad formats. The company closed its $10 million seed round led by M13, with participation from Torch Capital, Parable Partners, and Credo Ventures [1].

The advertising industry is poised to top $1 trillion in revenue in 2025, with digital advertising predicted to account for nearly three-quarters of total advertising. However, the industry faces challenges such as consumer distrust and privacy backlash due to traditional behavioral targeting methods. Kontext aims to address these issues by analyzing the context of user interactions in real-time, providing relevant and native-feeling ads [1].

Kontext's platform integrates seamlessly with AI chatbots and generative AI-powered apps. It offers a solution that captures both supply and demand in the new wave of digital advertising, aligning ads with genuine user intent and preserving user experience. The company's early customer base includes blue-chip brands like Amazon and Netease, which report that ads delivered via Kontext are more tolerable and helpful, integrated into the conversational journey [1].

Murri and the M13 team recognize that the digital advertising landscape is in the midst of a generational transformation. Two macro-trends are converging: changing consumer behavior, with users shifting from search and social feeds to AI-powered interfaces, and erosion of traditional targeting, with users and regulators increasingly hostile to invasive data tracking. Privacy-first, context-based solutions are in demand, and Kontext is well-positioned to meet this need [1].

Kontext's approach to advertising is a departure from traditional methods, which often rely on demographic targeting or behavioral history. Instead, Kontext aligns ads with real-time conversational context in AI interfaces, improving user experience and advertiser ROI. The company aims to make the ads on the "open web" as pleasant as those on Facebook or Instagram [1].

Murri and the M13 team believe that generative AI allows for the democratization of creating new consumer apps, companion apps, gaming apps, and search engines. This unplanned space is where human eyeballs are shifting, and it is the next wave of the digital advertising market. Kontext is well-positioned to dominate this new ad format, much like AppLovin did for mobile casual games [1].

References:
[1] https://www.m13.co/article/meet-kontext-redefining-the-future-of-ads-in-generative-ai